Economics Department Working Paper Series
Working Paper Number
2013-10
Publication Date
2013
Abstract
We show that (i) dynamic inefficiency may be empirically relevant in a modified Diamond model with imperfect competition, (ii) if fiscal policy is used to avoid inefficiency and maintain an optimal capital intensity, the required debt ratio will be inversely related to the growth rate, and (iii) austerity policies reductions in government consumption and entitlement programs for the old generation raise the required debt ratio.
DOI
https://doi.org/10.7275/4759961
Recommended Citation
Skott, Peter and Ryoo, Soon, "Public debt in an OLG model with imperfect competition: long-run effects of austerity programs and changes in the growth rate" (2013). Economics Department Working Paper Series. 163.
https://doi.org/10.7275/4759961